Making Good Compensation Decisions
A spin-off of a large Southern law firm came to Altman Weil for help with their compensation system. The firm wanted to add a new partner in a critical practice area, but they couldn’t agree on how to pay him or themselves. Some partners advocated a strict economic formula while others wanted to consider business development, community activities and leadership contributions as part of the equation. The firm had initially sought counsel from another advisor, but felt that the programmatic solution offered did not adequately address their unique situation.
Altman Weil responded by digging deeper into the firm’s current compensation process. We met with partners in a series of conversations to understand why the current system wasn’t working. We discovered a low level of confidence in the fairness of the decision-making process and a general lack of trust and collaboration among partners. By seeking consensus at every stage, we began to rebuild the compensation system and process from the ground up and succeeded in developing a program that was universally understood and agreed upon. We then remained with them through several iterations of their new process to help them become skilled in working with the new program.
The firm was able to add the new partner it wanted and a number of others as well. The partnership as a whole was more satisfied, alleviating the threat of partner defections. And the firm saw a marked increase in profitability as the increased confidence in the fairness of the comp system led to less hoarding of client work and more internal cross-selling of practices and services.
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